Smt. Nayna D.Shah,Prop.Ram Doot Enterprise, Ahmedabad V. The ACIT., Ahmedabad Circle-3, Ahmedabad

ITA 980/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1830 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-12-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 21-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Section: 143(3); 80HHC; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.980/AHD/2006 ASSESSMENT YEAR: 2002-03 DATE OF HEARING:1.12.09 DRAFTED 3.12.09 SMT. NAYNA D SHAH, PROP: RAMDOOT ENTERPRISE, POT NO.906/2, PHASE-IV, GIDC, NARODA, AHMEDABAD PAN NO.ACUPS1969E V/S . ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-3, AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE RESPONDENT BY:- SHRI GOVIND SINGHAL, SR. DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VII, AHMEDABAD IN APPEAL NO. C IT(A)VII/CIR.3/49/2005-06 DATED 05-01-2006. THE ASSESSMENT WAS FRAMED BY THE ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3, AHMEDABAD U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 18-03-2005 FOR THE ASSESSMENT YEAR 2002-03. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AS REG ARDS TO THE CLAIM OF DEDUCTION UNDER BOTH SECTIONS I.E.80HHC AND 80-IA OF THE ACT, WHETHER THE TWIN ADVANTAGES OF DEDUCTIONS CAN BE ALLOWED IN VIEW OF RESTRICTIONS I MPOSED U/S.80IA(9) OF THE ACT, AND DISALLOWANCE MADE BY THE ASSESSING OFFICER CONFIRME D BY THE CIT(A). FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.2 AND 3 :- ITA NO.980/AHD/2006 A.Y. 2002-03 SMT. NAYNA D SHAH V. ACIT, CIR-3, ABD PAGE 2 2. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS ] VII, GRIEVOUSLY ERRED IN INTERPRETING THE PROVISIONS OF SUB-SECTION [9] O F SECTION 80IA WHILE CONSIDERING THE ELIGIBLE DEDUCTION ALLOWABLE U/S.80 HHC OF THE INCOME TAX ACT, 1961 BY CONFIRMING THE VIEW OF THE LEARNED ASS ESSING OFFICER OF REDUCING OF THE CLAIM OF THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] VII GRIEVOUSLY ERRED BY CONFIRMING THE VIEW OF THE LEARNED ASSESSING OFF ICER WITHOUT PROPER APPRECIATION OF THE FACTS, EVIDENCES AND DATA AVAIL ABLE ON RECORD AND THEREFORE THE CLAIM OF THE DEDUCTION U/S. 80HHC OF THE INCOME TAX ACT, 1961 AS CLAIMED BY THE APPELLANT MAY KINDLY BE RESTORED AS CLAIMED. 3. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIV E, WE FIND THAT THIS ISSUE OF THE ASSESSEES APPEAL IS COVERED AGAINST THE ASSESS EE IN VIEW OF RESTRICTIONS IMPOSED U/S.80IA(9) OF THE ACT ON THE ALLOWANCE OF DEDUCTION U/S.80HHC AND 80IA OF THE ACT. ACCORDING TO THE LOWER AUTHORITIES, THE DE DUCTION UNDER THIS CHAPTER WAS TO BE REDUCED TO THE EXTENT OF SUCH PROFIT WHICH WAS I N RESPECT OF PROFITS AND GAINS OF INDUSTRIAL UNDERTAKING AND THEREFORE REDUCED THE DE DUCTION GRANTED TO THE ASSESSEE U/S.80IA OF THE ACT WHILE WORKING OUT DEDUCTION U/S .80HHC OF THE ACT. AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE US ON THIS IS SUE. 4. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT V. ROGINI GARMENTS (2007) 294 ITR 15 (AT), (CHENNAI) (SB), WHEREIN IT IS HELD AS UNDER:- FROM THE ABOVE, IT IS CLEAR THAT IF RESTRICTIVE CL AUSE NOT IN THE SAME SECTION BUT ION SOME OTHER PROVISION, IS CLEARLY SHOWING TH E MENS LEGIS IT HAS TO BE GIVEN FULL EFFECT. THEREFORE, IF RESTRICTION IS PL ACED ON THE CLAIM OF REPETITIVE DEDUCTION IN SECTION 80IA(9) AND IS MADE APPLICABLE IN RESPECT OF ALL DEDUCTIONS UNDER CHAPTER VI-A, THEN THIS RESTRICTIO N IS TO BE APPLIED. SINCE THE WORDINGS USED ARE ANY OTHER DEDUCTIONS UNDER CHAPT ER VI-A FULL EFFECT IS TO BE GIVEN TO THIS PROVISION AND WHENEVER AN ASSESSEE WANTS TO CLAIM DEDUCTION UNDER SECTION 80-IA(9) RESTRICTION IS TO BE READ IN EVERY OTHER PROVISION PROVIDING FOR DEDUCTION UNDER CHAPTER VI- A. APROPOS THE ARGUMENT THAT THE PROVISION IS COUCHED WITH AMBIGUITIES, AND THEREFORE THE SPIRIT OF THE ACT IS TO BE SEEN AND J USTICE BE DONE WE FIND THAT THE FREEDOM FOR THE SEARCH OF THE SPIRIT OF THE ACT OR THE MISCHIEF AT WHICH IT IS AIMED OPENS THE POSSIBILITY OF LIBERAL INTERPRETATI ON. THIS FINER ASPECT CANNOT BE NARROWLY WATCHED. IT IS THAT DELICATE AND IMPORT ANT BRANCH OF JUDICIAL POWER, THE CONCESSION OF WHICH IS DANGEROUS BUT THE DENIAL IS DISASTROUS. AT ONE STREAM STANDS LORD DENNING WHO SAID : WE DO NOT SIT HERE TO PULL THE LANGUAGE OF PARLIAMENT TO PIECES AND MAKE NON-SENSE OF IT. THAT IS AN EASY THING TO DO. WE SIT HERE TO FIND OUT THE INTENTION OF PARLIAMENT AND CARRY IT OUT. ITA NO.980/AHD/2006 A.Y. 2002-03 SMT. NAYNA D SHAH V. ACIT, CIR-3, ABD PAGE 3 WE DO THIS BETTER BY FILLING IN THE GAPS AND MAKING SENSE OF THE ENACTMENT THAN BY OPENING TO DESTRUCTIVE ANALYSIS. VISCOUNT SIMONDS CALLED IT A NAKED USURPATION OF THE LEGISLATIVE FUNCTION UNDER THE TH ING GUISE OF INTERPRETATION. IN OUR OPINION, THE INTENTION OF LEGISLATURE IS A V ERY SLIPPERY PHASE. WHEN THE LANGUAGE OF THE STATUTE IS TRANSPARENTLY PLAIN, IT IS WRONG TO GIVE IT COLOUR ACCORDING TO THE TEMPER OF TIME. WHEN THE LANGUAGE IMPLIED BY THE ENACTMENT IS CLEAR, THERE IS NO QUESTION OF INTERPRETING THE PROVISIONS IN ANY MANNER EXCEPT BY GIVING THEM THEIR PLAIN AND OBVIOUS MEANI NG. NEBULOUS CONCEPT OF THE LEGISLATIVE INTENT CANNOT BE USED TO CURTAIL TH E EXPLICIT PROVISIONS IN A STATUTE. A STATUTE OR ANY ENACTING PROVISIONS THERE IN MUST BE SO CONSTRUED SO AS TO MAKE IT EFFECTIVE AND OPERATIVE ON THE PRINCI PLE EXPRESSED IN THE MAXIM, UT RES MAGIS VALEAT QUAM PEREAT. THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE IS THE EDICT OF THE LEGISLATURE AND THE DUT Y OF THE JUDICATURE IS TO ACT UPON THE SENTETIA LEGIS. THERE IS NO ESTOPPEL AGAIN ST THE STATUTE. WE HAVE GONE THROUGH THE CIRCULAR RELIED ON BY LEAR NED COUNSEL FOR THE ASSESSEE. IT NOWHERE SUGGESTS THAT MORE THAN 100 PE R CENT DEDUCTION ON THE SAME PROFIT CAN BE GRANTED TO THE ASSESSEE UNDER VA RIOUS SECTIONS ENUMERATED IN CHAPTER VI-A. SECTION 80HHC IS PART O F CHAPTER VI-A. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SHARON VANEERS P. LTD.[2007] 294 ITR 18 (MAD.) (T.C.(A) NO.62 OF 2004 DATED FEBRUARY 26, 2007) , HAS MADE IT CLEAR THAT IT IS NOT CORRECT TO SAY T HAT SECTION 80HHC OF THE ACT IS A SELF-CONTAINED PROVISION. THE DEDUCTION CA NNOT BE ALLOWED IGNORING THE RESTRICTIVE CLAUSE CONTAINED IN SECTION 80-IA(9 ). THE RESTRICTIVE CLAUSE IN SECTION 80-IA MAKES IT ABUNDANTLY CLEAR THAT WHEREV ER DEDUCTION UNDER ANY OTHER SECTIONS OF CHAPTER VI-A(C) IS CLAIMED, THE C OMPUTATION WILL BE SUBJECT TO THE RESTRICTIONS LAID DOWN IN SECTION 80-IA(9). IT PRECLUDES PRO TANTO, ALL THE DEDUCTIONS OF SUCH PROFITS AND GAINS CLAIMED UNDER CHAPTER VI-A(C). SECTION 80HHC IS A PART OF CHAPTER VI-A(C). IT IS NOT A SE LF-CONTAINED PROVISION. THERE IS ABSOLUTELY NO AMBIGUITY ON THIS ASPECT. WE ARE THEREFORE OF THE OPINION THAT RELIEF UNDER SECTION 80-IA SHOULD BE D EDUCTED FROM THE PROFITS AND GAINS OF THE BUSINESS BEFORE COMPUTING RELIEF UNDER SECTION 80HHC OF THE ACT. FURTHER WE FIND THAT A LARGER BENCH OF FIVE MEMBERS CONSTITUTED IN THE CASE OF ACIT V. HINDUSTAN MINT AND AGRO PRODUCTS P. LTD. (2009) 315 ITR (AT) 401 (DEL) (SB), HAS DISTINGUISHED THE JUDGMENT OF HONBLE MADRAS HIGH C OURT IN THE CASE OF SCM CREATIONS V. ACIT (2008) 304 ITR 319 (MAD), CONFIRMING THE VIEW OF SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ROGINI GARMENTS (SUPRA). RESPECTFULLY FOLLOWING THE CASE OF HINDUSTAN MINT AND AGRO PRODUCTS (SUPRA) AND ROGINI GARMENTS (SUPRA), WE DISMISS THIS ISSUE OF THE ASSESSEES APPEAL. ITA NO.980/AHD/2006 A.Y. 2002-03 SMT. NAYNA D SHAH V. ACIT, CIR-3, ABD PAGE 4 5. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AS REGARDS TO THE TREATMENT OF DEPB INCENTIVE FOR THE PURPOSES OF ALLOWANCE OF DED UCTION U/S.80HHC OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.4 :- 4. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS ] VII GRIEVOUSLY ERRED IN CONFIRMING THE VIEW OF THE LEARNED ASSESSING OFF ICER THAT DEPB INCENTIVES ARE TREATED AS OTHER INCOME RATHER THAN BUSINESS IN COME AND ALLOWED PROPORTIONATE ALLOWABLE DEDUCTION U/S./80HHC OF THE INCOME TAX ACT, 1961, WHICH IS REQUIRED TO BE CONSIDERED IN THE PROPER MA NNER TO ENABLE THE APPELLANT TO CLAIM THE DEDUCTION IN THE MANNER AS I T HAS BEEN CLAIMED. 6. WE HAVE HEARD THE LD DEPARTMENTAL REPRESENTATIVE AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT T HIS ISSUE HAS BEEN DECIDED BY THE MUMBAI SPECIAL BENCH IN THE CASE OF TOPMAN EXPORTS V. ITO (2009) 318 ITR (AT) 87 (MUM) (SB), WHEREIN IT IS HELD THAT ONLY THE NET PROFIT OF DEPB SHOULD BE EXCLUDED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80H HC OF THE ACT. HE REFERRED TO THE CASE LAW IN THE CASE OF TOPMAN EXPORTS (SUPRA) AND STATED THAT THE ISSUE CAN BE REVERT BACK TO THE FILE OF ASSESSING OFFICER FOR DE CIDING THE ISSUE IN TERMS OF TOPMAN EXPORTS (SUPRA). THIS ISSUE OF ASSESSEES APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 18/12/2009 SD/- SD/- (DR.O.K.NARAYANAN) (MAHAV IR SINGH) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED :18/12/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- VII, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD